PSE eases IPO, listing requirements

The local bourse is proposing several changes in its rules that will make it easier and more attractive for companies planning to list their shares or undertake an initial public offering (IPO), an official of the Philippine Stock Exchange (PSE) said.

Trisha Zamesa, head of the PSE’s Listings and Disclosure Department, said the PSE board has given the go-signal to amend some provisions in the the listing rules which will then be submitted to the Securities and Exchange Commission (SEC) for its approval.

At the top of the main provisions changed in the listing guidelines is the waiver of the financial projections as a component of the applicant company’s business plan. In its place, Zamesa said, will be a more general statement of active business pursuits which will describe the steps of activities taken or proposed to be taken by the prospective issuer in order to advance its business.

Financial projections shall not be required unless there are references made in the firm’s statement of future profit or losses or any other items that form forecasts, she added. The waiver of the financial forecasts is also intended to avoid any legal liabilities that may arise should the company fail to meet the said targets.

At the same time, Zamesa said the PSE said it would shorten the lock-up period of share ownership for companies to be listed at the second board and the small and medium enterprise (SME) board in order to free up more liquidity to the market.

A lock-up period disallows all the company’s existing stockholders to sell, assign or dispose in any manner their shares after listing. The lock-up would also apply to shareholders who have availed of any issuance of shares through private placements, asset for shares swap or any similar transaction, or instruments such as convertible bonds, warrants within 180 days prior to listing, with the transaction price lower than that of the IPO price.

From two years after listing, shareholders in second board firms can free up their shares after only a year while for SMEs, the lock-up period is shortened from three years to two years. Firms listed at the second board have an authorized capital stock of P100 million to P399 million while SME companies have an authorized capital of P20 million to P99 million.

Zamesa said the track record requirement for SME applicants has likewise been eased, from a two-year history of operating income to only one year, hence making it possible for young but potentially high-growth SMEs to immediately open up its ownership to the public.